This country never learns! Throughout history it has allowed its courtesy to be abused by foreign powers. The Portuguese, so goes a story, after landing here over five hundred years ago obtained the permission of the king at that time to acquire a block of land of the size of a cow s hide. Thereafter, they tore the hide into strips, tied them and demarcated an area sufficient for a fortress. Then our ancestors got the help of the Dutch to get rid of the Portuguese only to realise those two marauding forces were tweedledum and tweedledee. Thus, they swapped ginger for chillies and later signed a convention with the British, who promised many things but, true to form, broke all their promises.
That we have suffered at the hands of wily foreigners is no reason why we should be xenophobic. Times have changed and foes have become friends. We must learn to jettison baggage. But, the wise learn from their experience and we must be wary of lowering our guard in dealing with robber barons and their economic hit men.
Unfortunately, Sri Lankan political leaders, swayed by pecuniary inducement or some other considerations, have allowed foreign commercial forces to gain a foothold a la the Portuguese of yore and expand their operations. Those politicians are alleged to have bought palaces on the banks of the Nile or mansions overseas, opened offshore accounts and educated their progeny with the dirty dosh made through crooked deals.
The divestiture of state enterprises in the name of economic liberalisation has proved to be disastrous. Gas prices are skyrocketing as the state is without any means of making market interventions. The national carrier was being reduced to a regional airline by its foreign management systematically. Cement has become more expensive than gold dust thank to privatisation!
The LIOC has jacked up diesel prices by Rs. 20.00 for a second time in four days, in retaliation for a government tax. When LIOC increased its diesel prices by Rs. 20.00 on May 23, it said it was incurring a loss of Rs. 3.00 on a litre of petrol. However, it refrained from increasing petrol prices. Then came the CPC price hikes of Rs. 30.00 on regular petrol per litre in addition to diesel and kerosene price increases by Rs. 30.00 and Rs. 10.00 per litre respectively. That proved to be a bonanza for LIOC, as it was able to make a profit of Rs. 27.00 on petrol per litre. The government promptly slapped a tax on petrol in a bid to grab part of that profit.
No sooner had the CPC Chairman Asantha de Mel bragged about that move at a meeting President Mahinda Rajapaksa had with media heads on Tuesday than LIOC reacted to the tax the way it did. If the petrol tax is removed, the diesel prices will be brought down, the LIOC says!
What would have been the situation if the CPC had divested itself of all its filling stations? It would have had to stand and deliver!
The LIOC is said to control 159 fuel stations while there about 828 outlets under the CPC control. The CPC also has control over 107 fuel stations, which the Treasury took over, when a government plan to sell them to Bharat Petroleum went awry due to workers protests. In 2004, trade unions staged a strike crippling the CPC operations and leaving the country high and dry. Their main demand was the cancellation of the plans to sell fuel stations.
Thereafter, the LIOC sought to set up 300 more fuel outlets. The CPC trade unions vehemently opposed this move and a feasibility study conducted with the help of the University of Moratuwa revealed the country needed only 167 refilling stations more. Of this number, the government offered 121 to the LIOC and the remaining 46 to the CPC, triggering trade union action again. That plan, too, had to be shelved.
The CPC trade unions are of the view that if the LIOC market share increases beyond 45 per cent from its present 30-35 per cent, the CPC refinery will become unprofitable.
For once, the CPC unions have acted in the national interest! The political windbags bellowing rhetoric against the LIOC must thank the much maligned trade unionists.
The CPC fuel outlets will be able to manage the ill effects of the second diesel price hike by the LIOC in most parts of the country but in some areas the public may be dependent on LIOC facilities for want of CPC outlets.
If the lucrative bunkering facility had not been privatised, the government would have been able to recover part of CPC s losses with the income generated from it. Those responsible for its sale are today protesting against high fuel prices by taking bullock cart rides in public. Whom are they trying to fool?
Speculation is rife that the CPC will lose its monopoly on the supply of aviation fuel in time to come. It will be nothing but hara-kiri for the government to abolish a profitable state monopoly in a crucial sector. If that happens, the CPC profits from that venture will decrease drastically and the government will have no way of cushioning the blow when fuel prices soar in the world market. All the losses will have to be passed on to the public.
Let the LIOC s arrogant reaction to the petrol tax serve as a warning!